Imagine a huge crime wave is sweeping the nation. The villains have already pilfered more than $4 million and they’re still at it: one in every two Australians is in danger of becoming a victim, and the police are basically unable to do anything about it.
That might sound horrifying, but it’s happening. The criminal gangs involved don’t roam the streets, but their numbers are soaring. They are invisible, hiding behind computers and false IP addresses from Russia to Rwanda and targeting millions of Australians who buy and sell online.
The Australian Competition and Consumer Commission recently reported a 65 per cent jump in online shopping scams, and Australian Bureau of Statistics surveys show more than half of all Australians now buy and sell on the internet. Put those two statistics together and there’s clearly a burgeoning problem. More than 8000 victims of online shopping frauds complained to the ACCC last year, and their losses totalled $4,038,479.
However, according to deputy chairwoman Delia Rickard, that represents only the tip of the iceberg. ”A lot of people don’t even realise they’ve been scammed,” says Rickard, who also chairs the Australasian Consumer Fraud Taskforce. ”Others are too embarrassed to tell anyone, and there are several other agencies that scams are reported to.
”The crimes are increasingly sophisticated and regularly committed from overseas. They use complete replicas of legitimate shopping sites, for instance, organised crime is involved, and there is great difficulty in identifying the perpetrators.
”Although we work closely with law-enforcement agencies, there’s no use in referring every single scam to police,” Rickard says.
There are thousands of scams targeting online shoppers, and the stings vary from brilliant to banal. Some try to sell your house while you’re on holiday, but the most common involves online shoppers who pay for something advertised online – it could be anything from perfume to a parrot – then find to their dismay that the goods never arrive, and the advertiser turns out to be a fraudulent or non-existent entity.
Some scammers pretend to sell goods at a bargain price so they can steal credit card or bank account details. Others will use high-pressure conman tactics to sell anything from tropical islands to private jets. Problem is, they don’t own them.
The swindles are not confined to internet shoppers. Online sellers are being targeted just as heavily, and overpayment scams are one of the most frequent traps.
Victims of this scam accept an offer for their goods – say, a gold watch – and the crook will ”accidentally” send a cheque for more than the agreed price. The scammer will then demand an urgent refund by wire transfer, hoping it will be paid before the cheque bounces. Victims not only lose money, they often lose the gold watch too.
Detective Senior Sergeant Peter Endler of the Victorian fraud squad disagrees that police are powerless, but admits only the most serious cases are dealt with. ”Many fraudsters know this so they rely on volume and keep the value of individual scams down, knowing they’re likely to fly under the radar,” he says.
”We use terms like ‘high victim impact’. If a major bank loses $5 million, and in another case a retired couple loses all their life savings of $200,000, we would see that fraud as having much higher impact than the one on a major bank.”
One restriction on police is that they can only prosecute a fraud that has taken place within their state, and an internet crime is deemed to have been committed where the fraudster is – not where the victim lives. ”If the fraudster is in Iraq, well, that’s problematic,” Senior Sergeant Endler says. ”But we can, and do, act on Victorian cases. A classic example I’ve seen is a fraudster who knew the owners of an apartment were overseas, so he advertised it for sale on the internet and scammed money from would-be buyers. He was caught.”
It’s worth noting that this story deals only with online shopping scams, which represent 10 per cent of the electronic communication frauds reported to the ACCC. Crooks gleaned another $90 million from other online and telephone swindles involving false billing, pyramid schemes, dating rip-offs and unexpected prizes.
There is one huge piece of good news in all this: victims of online shopping scams will almost certainly get their money back, provided they use banking facilities such as credit cards or an account transfer.
The ACCC says 88 per cent of those reporting scams suffered no financial loss, and Australian Bankers Association chief executive Steven Munchenberg says all bank customers will be protected from loss in genuine fraud cases, including if goods fail to arrive, or arrive broken or faulty.
Commonwealth Bank spokesman Steve Batten backed this up. ”Customers who respond to any online advertisement – including scheme card payments facilitated via PayPal – have the option of initiating a charge back in the event of purchasing goods and not receiving them,” he says.
To double-check, consumer group Choice agreed to send out a message via social media, asking whether anyone had experienced a bank refusing to make a refund. Livewire received one mournful reply, from a woman who hadn’t asked her bank.
Barbara said she paid $150 for US iTunes vouchers advertised at half-price. ”The deal wasn’t through eBay so I knew there was some risk, but I figured it was low as I’d bought from them before. I never heard from the vendor again, nor received the gift cards,” she said, asking that her last name not be used ”as I do feel a twit”. Don’t feel like a twit, Barbara. The same thing has happened to tens of thousands of intelligent, trusting Australians.
How to avoid online rip-offs
- If it sounds too good to be true, it almost certainly is.
- Never pay by wire transfer, and be suspicious if you are asked to.
- Try to use large, reputabl eonline shopping sites.
- Click on the left-hand side of the internet address bar and check if a padlock symbol pops up. If it does, the site is more likely to be secure.
- Pay with a credit card linked to your bank, by bank electronic transfer, or by PayPal.
- Notify your bank immediately if you have been scammed.
- Visit scamwatch.gov.au, an ACCC website that advises on a whole range of scams.
Countries with most banking malware victims (as a percentage of all victims)
- United States: 28 %
- Brazil: 22 %
- Australia: 5 %
- France: 5 %
- Japan: 4 %
- Source: TrendMicro